Nevada Sues Kalshi, Says It’s Engaging in ‘Unlawful Behavior’

Posted on: February 18, 2026, 10:33h. 

Last updated on: February 18, 2026, 10:33h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • A 9th Circuit Court ruling paves the way for Nevada to block Kalshi from doing business there
  • The Gaming Control Board filed a civil enforcement action against the prediction market firm
  • Board says Kalshi is expanding its business amid legal challenges

Following a ruling by the 9th Circuit Court of Appeals, the Nevada Gaming Control Board (NGCB) filed a civil enforcement action against Kalshi in a bid to bar the prediction market operator from doing business in the state.

Kalshi word mark on a black background on a phone
A Kalshi social media ad. Nevada regulators filed a civil enforcement action against the company. (Image: Getty)

The appeals court’s decision arrived after U.S. District Judge Andrew Gordon lifted an injunction which allowed Kalshi to operate in Nevada. The state contended that since Kalshi filed a stay motion, it has expanded its business, including sports event contracts.

Since filing its stay motion, Kalshi has continued to dramatically expand its business, rather than attempting to maintain any kind of status quo,” wrote Deputy Solicitor General Jessica Whalen in a letter to the 9th Circuit Court. “Kalshi has massively increased its trading volumes, and has aggressively (and wrongly) marketed its sports bets as “100% legal” in “all 50 States,’” As the district court found, every day that Kalshi operates in violation of Nevada law causes ‘substantial irreparable harms to [State Defendants], the State of Nevada, the gaming industry in this state, and the public interest.’”

Nevada has been aggressive in its efforts to block prediction markets from doing business there with Whalen pointing out in her letter that to the state’s knowledge, Kalshi “is the only prediction market currently operating in Nevada.”

Sports Contracts at Heart of Kalshi/Nevada Rift

Kalshi’s sports event contracts, which drive substantial portions of the exchange’s volume, are at the epicenter of the company’s legal battle with Nevada.

Put simply, Nevada and other states argue prediction market operators cannot offer derivatives amounting to be sports bets in those jurisdictions because those companies don’t have state gaming permits. For their parts, prediction market operators cite into federal preemption — legal precedent indicating federal regulations supersede state guidelines.

While prediction firms are federally regulated by the Commodities Futures Trading Commission (CFTC), courts are consistently siding with states in challenges against the industry, agreeing that companies such as Kalshi are offering what amounts to be gambling services and are doing so without the necessary state licenses.

“Kalshi is a financial services company that operates a derivatives exchange and prediction market, which offers products referred to as event contracts for sale,” said the NGCB in its civil enforcement action. “These products are offered for sale on Kalshi’s website and mobile app, and are made available to people in Nevada. The Board considers offering sports event contracts, or certain other event contracts, to constitute wagering activity under NRS 463.0193 and 463.01962 and, therefore, entities offering such event contracts must be licensed.”

Prediction Market Debate Splintered Along Political Lines

The NGCB’s decision to file a civil enforcement action against Kalshi comes amid heightened political theatre surrounding prediction markets. The Trump Administration is voicing support for companies such as Kalshi and Polymarket while Senate Democrats are aligning against the young industry.

There’s speculation that the White House supports the industry because Donald Trump Jr. is an advisor to Kalshi and Polymarket. His venture capital firm 1789 Capital is also a financial backer of Polymarket. However, yes/no exchanges are attempting to cover as many political bases as possible.

For example, Kalshi recently appointed a former staffer of President Biden’s to lead its federal lobbying efforts and that company’s primary law firm is a major benefactor of Democrat candidates and electoral committees.